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Company Xs earnings this year were $3 per share. The dividend was just paid. The risk premium of the stock 11%, and the risk-free rate
- Company Xs earnings this year were $3 per share. The dividend was just paid. The risk premium of the stock 11%, and the risk-free rate is 6%.
- Find the price of company X using Constant-growth DDM if the market estimate of Company X's ROE is 15% and the plowback ratio is 0.
- Find the price of company X using Constant-growth DDM if the market estimate of Company X's ROE is 15% and the plowback ratio is 1/2.
- Compare your answer from a) and b). Explain why one is greater than the other.
- Find the price of company X using Constant-growth DDM if the market estimate of Company X's ROE is 19% and the plowback ratio is 0.3.
- Find the price of company X using Constant-growth DDM if the market estimate of Company X's ROE is 19% and the plowback ratio is 0.7.
- Compare your answer from d) and e). Explain why one is greater than the other.
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Capital Markets Institutions Instruments And Risk Management
Authors: Frank J. Fabozzi
5th Edition
0262029480, 9780262029483
